GBP/JPY Price Analysis: Bears to Pounce 152.0 amid Covid, Brexit Woes

• Following the most precipitous decline since last Friday, the GBP/JPY remains pressured near a two-week low.
• Fishermen from France are preparing to block the Tunnel over license issues, and EU officials are in London to discuss border issues with Northern Ireland.
• In addition to the South African Covid variant, Moody’s rating and Japan data strengthen the JPY.

The GBP/JPY price analysis shows a strong bearish scenario after the price strongly surged below the 153.00 level. Following a week-high and a two-week low ahead of Friday’s London opening, the GBP/JPY price is licking a sore in the 152.55 region. Unfortunately, while caring for bears, the cross suffered a double attack due to a Coronavirus outbreak and Brexit concerns.

French fishermen plan to block the Channel Tunnel and key ports in protest of UK fishing license regulations on Friday. However, French outrage is unlikely to be stopped by the UK government’s warning not to use illegal means.

Suppose the parties reach an agreement on the Border Protocol with Northern Ireland (NI), which has shown some progress recently. In that case, the EU Brexit Representative Maros Sefchovic to London could please British diplomats.

The refusal of the Bank of England (BOE) Governor Andrew Bailey to raise interest rates the previous day, which cut the likelihood of rate hikes, also had a negative impact on the GBP/JPY price.

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In addition, Japan’s recent opening and the forecast by the rating agency Moody’s could cause the yen to rise further. According to Reuters, Japanese Cabinet Secretary Hirokazu Matsuno said, “We are reviewing our border controls if new variants of the Coronavirus are identified.” in its updated credit rating.

Data showed a 0.1% increase in the Tokyo Consumer Price Index (CPI) from the previous month to 0.5%, but a 0.3% decline in the consumer price index ex fresh produce compared to 0.1% in November 2016. Additionally, the consumer price index excluding food and energy fell by 0.3% year-over-year, in line with expectations.

US dollar demand rises due to concerns that a rate hike by the Fed will occur at the wrong time. Covid-19 problems, on the other hand, are spreading beyond Europe’s original fear zone because of concern over a variant, officially named B.1.1.529, associated with South Africa and immune to vaccines. The World Health Organization (WHO) and UKHSA met separately on Friday for the same reason.

Continuing Wednesday’s retreat from the monthly high, 10-year US Treasury yields dropped eight basis points (bps) to 1.565%, while S&P 500 futures fell 1.0%.

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GBP/JPY price technical analysis: Bears getting stronger

The GBP/JPY price is slowly moving towards the support level of 152.40. The volume data points at more losses. Breaking the support of 152.40 may trigger a deeper correction to 152.00 and lower. The upside pullback may find resistance around 153.00.